I guess the word confused would best describe my reaction to the Federal Budget handed down by the Government last week. I was expecting some tough decisions to be made so that Australia could emerge from this recession in fairly good shape, but instead the Budget had no clear direction and it seems the Government is hoping that by throwing money at major infrastructure projects that it can appease the public until China saves the day.
I do not have a problem with the Government trying to lessen the impact of the recession by funding some major infrastructure projects but the spending has to be focused, deliver clear benefits to the economy and be kept to a minimum. But the spending outlined in the budget looks like a uncoordinated mix of mainly road and rail projects aimed more at propping up voter support than making the nation more globally competitive.
What I would have liked to have seen was more of a balance between traditional infrastructure spending and incentives for the private sector to invest in such areas renewable energy, medical research and modern transport links.
I also do not understand the logic behind giving out another round of tax cuts as the country plunges into debt. The Rudd Government could have made a truly courageous decision and cancelled the tax cuts in order to help keep debt more under control, but they took the easy option and this highlights the fact that Kevin Rudd is not an economic conservative as he often claims. He is the sort of leader that will spend big to remain popular and the problem is that he is spending our money!
I suspect few people will be against the extra money for pensioners and carers but again the Budget seems to lack direction as it also pushes back the eligible age for the pension to 67 (gradually from 2017). We are told this is because Australia’s ageing population will place a significant burden on future budgets in the decades ahead, but if this is so why not encourage more self funded retirees and provide tax breaks for people who remain in the workforce after 65?
I am sure if a conservative government dared to push back the retirement age there would be howls of protest from the unions, but they seem amazingly quiet on the subject at present. I wonder why that is? (perhaps because they got what they wanted in other areas of the budget)
The extra spending on health is welcome but here again we see the Rudd Government lacking direction because at the same time they are also pulling money out of the overall health system by cutting rebates for private health insurance.
The network of private hospitals and clinics across Australia are important alternative to the public health system and I fail to see why any government would be trying to push people towards public hospitals when many of them are simply poorly run and managed. Why do we have a Government that seems intent on pushing the private sector out of healthcare?
The truth is that the cut in private health insurance rebate has nothing to do with the recession or the need to reduce government spending, it is simply Labor Party policy being implemented via the back door using the global economic downturn as a cover.
Rudd and Swan have also tried to suggest that the reason the Government needs to spend so much on infrastructure etc. is because the Howard Government failed to invest in the nation when in power. However they fail to mention that Howard and Costello first had to pay down debt left by the Keating Government and I suspect in some years time another Coalition Government will need to pay off Rudd’s debt.
It is also curious that nobody seems to be asking what the State Governments did with all the money they took into during the boom years.
Any Government can borrow and spend big, this is not difficult to do and is the path the Rudd Government has taken. Instead of making some truly hard decisions, the Budget is aimed at keeping Kev07 popular thereby delaying any real pain until he has safely taken up a role in the U.N. By that time we will finally be coming to grips with the true cost of Rudd and Swan’s budget follies.
But maybe I am being too harsh because although Wayne Swan might be unable to put together a decent budget, he sure does have some pretty sound shopping tips as you can see in this clip below. As you watch this video just remember this is the same man who is responsible for managing billions of dollars or our money so be afraid, be very afraid.
I can hardly wait for Wayne’s consumer tips during the next election campaign!